Determining the Suitability of Fred's Miracle Cough Syrup for Public Offering

The assignment content discusses the costs of raising capital by offering securities to the public. It also highlights the importance of compliance with government regulations, specifically the Securities Act of 1933 and the Sarbanes-Oxley Act (SOX). The Howey Test is applied to determine whether Fred's Miracle Cough Syrup meets the criteria for securities. However, due to the company's financial instability and ongoing legal issues, it is not recommended to go public. Instead, the company should focus on recovering from its current situation before considering an initial public offering (IPO).

Final Submission
CASE STUDIES 1, 2, AND 3

Contents
CASE STUDY 1........................................................................................................................................................1
Types of business entities...............................................................................................................................................1
Product liability...............................................................................................................................................................1
Agency relationship........................................................................................................................................................2
Potential real property issues..........................................................................................................................................2
Manufacture....................................................................................................................................................................2
Potential personal property issues and liability issues....................................................................................................3
Estate planning issues and Transfer ownership..............................................................................................................3
CASE STUDY 2........................................................................................................................................................3
As against Don................................................................................................................................................................3
Church.............................................................................................................................................................................4
Civil Claims....................................................................................................................................................................4
Bankruptcy......................................................................................................................................................................4
Implication of bankruptcy on business asset..................................................................................................................5
Implications of bankruptcy on personal assets...............................................................................................................5
Infringement of Patent....................................................................................................................................................5
CASE STUDY 3........................................................................................................................................................5
IPO..................................................................................................................................................................................5
Determination.................................................................................................................................................................7
Recommendations...........................................................................................................................................................7
References.......................................................................................................................................................................9

CASE STUDY 1
Types of business entities
Sole Proprietorship, Partnership, and Corporation is the primary business elements. As the name
recommends the Sole Proprietorship is the place where there is a solitary proprietor at risk for all
the business choices and have the sole appropriate to the property, then again, Partnership is
between at least two people, and is by and large separated into two classes and they are General
Partnership and Limited Partnership. General Partnership is one where at least two accomplices
have the obligation to share the administration and is by and by at risk for every one of the
obligations, be that as it may, in Limited Partnerships the accomplices are just constrained to the
sum they contributed towards the capital and in this sort of organization one accomplice isn't
engaged with the day by day exercises and alternate accomplices acts like the general
accomplices. The third fundamental business element is, where a different lawful element is
shaped and the financial specialists purchases the stocks and the board deals with the business.
Product liability
Product liability makes the vender or the producer of the item, being held at risk for generation
of the inadequate items under the control of the buyers. In this way, the producer is basically in
charge of any imperfections with regards to the item. In here, the item Fred's Miracle Cough
Syrup have extreme responses if brought with the headache medicine, so this item does not meet
the desires of the purchaser (Wilkes v DePuy International Limited , 2016).
Agency relationship
Agency is the trustee connection between the key and the specialist. Sam is as of now helping
Fred in doing the conveyances, so there is a connection, since when Sam is conveying the item to

the clients i.e. the outsider, he is really going about as an operator to Fred's item, and this
relationship won't be destroyed if any of the business elements beforehand examined is opted for
(Clarmoda Ltd v Zoomphase Limited, 2009).
Potential real property issues
As the landed property is in the family cultivate, so it can be comprehended that it is in the edges
and furthermore it is fixing up to that specific place and the long-separate from the standard city
is the snag which needs consideration.
Manufacture
In (BOOTH v. THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF
AUSTRALIA, 1987), the Court held that at the point when a proprietor acquires from the land,
at that point that privilege is a theoretical right and can't be made for move in the Court of law,
yet the results of the land can be the conceivable game-plan if the rights gets encroached there,
so in this viewpoint, Fred is fabricating the item to sell and not for individual utilize, so the make
of Fred's Miracle Cough Syrup on the family cultivate requires a formal exchange of possession
or possessory rights.

Potential personal property issues and liability issues
Until and unless there is any mischief caused by the worker or Sam to be particular, at that point
there is no individual property issue that may emerge. On the off chance that lone there is any
mischief caused to an outsider, at that point Fred will likewise be dependable under vicarious
obligation because of the careless follow up on part of Sam.
Estate planning issues and Transfer ownership
Estate planning issues needs to scribbled down at the principal occasion, so the specific segment
of riches stays with the family even after the passing of the proprietor. The home can likewise be
decayed on the people to come or can likewise be sold to certain other individuals in lieu of a
reasonable cost.
Along these lines, in view of the previously mentioned sentiment the best conceivable choice for
Fred and Sally can choose the Limited Liability Partnership which has a minimal effort start-up
and furthermore that the obligation can be constrained to the degree of the capital.

CASE STUDY 2
As against Don
The legitimate guard will exhibit that Don Check Cashing, fail to act in a business sensible
standard. Despite the way that the checks were made to him, the signatories on the check were
not the names recorded and it was likewise not Fred's mark, isn't authentic or fabrication under
section 1-201 under the Uniform Commercial Code (US Government). Jane was accountant for
the association. Both Fred and Sally were the affirmed signatories for the association. Jane
created a couple of checks payable to Don, to repay her wagering commitment. A gathering's
qualification to maintain a debatable instrument is shielded by blackmail in the factum,
impersonation, material change. If Jane was not endorsed to sign for the benefit of Fred and
Sally, so they won't be in danger for the check. Bank, will have clarifications that the customer
doesn't exhort the bank inside determined time, along these lines, bank can't be committed for the
creation.
Church
As of Church it will be hard to demonstrate Church' malafide purpose. Once more, the Church
was the holder at the appropriate time and had no learning with regards to the fabrication of
check. In any case, under section 3-103(7), of Uniform Commercial Code, Fred and Sally could
likewise demonstrate that they were in upkeep of the business and took due care which a normal
man should and this will enable them, since, bank to will start the discount for the misfortune in
lieu of holding the safe bank being made at risk for the inability to confirm the check legitimacy.

Civil Claims
A few checks were fashioned by Jane and written to Don. Jane has likewise disregarded trustee
obligations to business, by thefts of assets and furthermore manufacturing explanations, so she
can be sued for the break of guardian obligation in the Court of Law and case of harms is a
conceivable alternative.
Bankruptcy
The accessible types of insolvency are plot here, where in Liquidation, people surrender non-
excluded resources and in revamping under Chapter 11 (US Government) , organizations are
only the rebuilt obligation where obligations are reimbursed with maintenance of advantages and
a few banks gets ponied up all required funds with premium. Be that as it may, if recorded under
Chapter 7 (US Government) at that point there will be no release on obligations, it is because of
the way that the business stops to exist for this situation.
Implication of bankruptcy on business asset
On the off chance that Fred and Sally document a Chapter 7 insolvency then the entire of the
business resource gets exchanges at the same time, if Chapter 11 is picked then renegotiating
obligation reimbursement dies down with a change on the whole corporate structure of the
business.
Implications of bankruptcy on personal assets
Individual resources will be in question if the claim a Chapter 7 insolvency, so one will confront
issues identifying with constrained deal, liens, or relinquishment, however in the event that a
Chapter 11 liquidation is guaranteed then there will be an alternative accessible to re-consult
with the leasers for the re-development of the business.

Infringement of Patent
The activity of Bob obviously delineates the encroachment of the protected innovation rights
with respect to patent. In any case, so as to document an encroachment against Bob, it is required
to demonstrate that the organization have the exclusive right on the item i.e. the cough syrup and
have enlisted it as a patent (US Government).

CASE STUDY 3
IPO
A first offer of stock or initial public offering (IPO) is a key improvement in an affiliation's life
cycle. A strong IPO exhibit is basic for a few reasons. An Initial Public Offering, additionally
rang opening to the world, is a course for a business to raise capital by pitching offers of the
association to financial specialists. The methodology is controlled by the Securities and
Exchange Commission (SEC) and incorporates, among various diverse things, the chronicle of
an enlistment verbalization and point by point layout for review by the SEC and potential
monetary masters. Introductory open offerings give business visionaries liquidity for their
hypotheses, so a dynamic IPO market can animate the flood of pre-IPO theories and help
develop new interests. An IPO gains new budgetary pros to a firm, which urges the affiliation's
passageway to future improvement capital. Being open in like manner diminishes the costs of
raising future capital by quickening the supply of information from the venture gathering.
The registration statement must contain the accompanying data as indicated by the models set by
SOX Sarbanes-Oxley Act:
A clear portrayal of the securities offered available to be purchased;
A substantial and significant clarification of how continues from the offer of securities
will be utilized;
An intricate portrayal of the registrant's business and properties;
Administration Information of the organization;
Cases pending, where the registrant may be included; and
Money related proclamations affirmed by an autonomous open bookkeeper.

Determination
To decide whether Fred's Miracle Cough Syrup is in consistence with government controls, the
Howey Test as set down in (SEC v. W. J. Howey Co. or Securities and Exchange Commission
v. Life Partners, Inc. , 1995), can be connected, which is a test made by the Supreme Court for
deciding if certain exchanges qualify as security (stock or bonds). Under the Howey Test a
substantial security are as per the following:
It is a speculation of cash
There is a desire of benefits from the speculation
The speculation of cash is in a typical endeavor
Any benefit originates from the endeavors of a promoter or outsider.
The organization clearly meets the majority of the criteria to fit the bill for securities. The stocks
are the venture of cash, the investors hope to pick up benefits from the speculation, the venture is
a typical endeavor i.e. a game plan in which at least two individuals together take after basic
targets or objectives, and the benefit are coming too. Essentially, with a specific end goal to have
legitimate securities i.e. stock or bonds one should first demonstrate that they are in truth
legitimate and are liable to government securities law that are requires the enrollment of those
securities under (The Securities Act, 1933) preceding they are offered to people in general.
Recommendations
So, it is not recommended to go public. The required full exposure of Jane's misappropriation
will make hazard with ease on offers and it will probably lose cash other than picking up it. The
claim recorded by Tammy will put another hit on the organization too. Opening up to the world
can't be less expensive. An organization opening up to the world causes an assortment of costs

regarding an IPO. These costs incorporate a SEC enrollment charge, a recording charge, a stock
trade posting charge, bookkeeping charges and costs, lawful expenses and costs, exchange
specialist charges and costs, printing costs and street indicate costs. Thus, it is prescribed to hold
up couple of more years and recover the books and budgetary quality before opening up to the
world. For whatever length of time that there are not any more critical unsettling influences in
the business, it can be extended and open up to the world. It is smarter to regroup and fabricate
an extraordinary client pool and recover the altruism for the item with a specific end goal to be
capable offer the offers for what they extremely worth.

References
BOOTH v. THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA, (1987) 164
CLR 159 (HIGH COURT OF AUSTRALIA December 16, 1987).
Clarmoda Ltd v Zoomphase Limited, [2009] EWHC 2857 (Comm) (High Court November 13, 2009).
SEC v. W. J. Howey Co. or Securities and Exchange Commission v. Life Partners, Inc. , 898 F. SUPP. 14 (1995)
(U.S. District Court for the District of Columbia 1995).
The Securities Act. (1933). Retrieved from https://www.law.cornell.edu/wex/securities_act_of_1933
US Government. (n.d.). 11 U.S. Code Chapter 11 - REORGANIZATION. Retrieved from
https://www.law.cornell.edu/uscode/text/11/chapter-11
US Government. (n.d.). 11 U.S. Code Chapter 7 - LIQUIDATION. Retrieved from
https://www.law.cornell.edu/uscode/text/11/chapter-7
US Government. (n.d.). 35 U.S. Code § 271 - Infringement of patent. Retrieved from
https://www.law.cornell.edu/uscode/text/35/271
US Government. (n.d.). Uniform Commercial Code › U.C.C. - ARTICLE 1 - GENERAL PROVISIONS (2001) ›
PART 2. GENERAL DEFINITIONS AND PRINCIPLES OF INTERPRETATION › § 1-201. General
Definitions.- (19) "Genuine". Retrieved from https://www.law.cornell.edu/ucc/1/1-201
Wilkes v DePuy International Limited , [2016] EWHC 3096 (QB) (High Court, QBD December 6, 2016).